As far as I am aware, it is down to sudden spikes and surges in the output of the alternator during the regen braking, this can then overload the wiring or VSR sending them into meltdown via either amps or voltage.. It can also overheat/cause damage to or cause the battery to out gas due to An excessively high charge rate.. Note some alternators/regen braking harvesting could be set different due to software updates.
Another point not well understood by some, is the fact that all AGM, gel batteries have valves on them that lift if the battery has a problem, and the gas vented is hydrogen (remember the Hindenberg?). For this reason, there is a vent hole on the battery casing, designed for this that should have a vent tube attached to remove these gases to atmosphere when the battery is in an enclosed space or inside the vehicle to prevent a buildup of this gas in this event, which could be ignited by a spark etc.
The smart chargers that are true ones have a temp probe that you attach to the battery as well. This monitors the battery temp and if excessive the unit will shut down, but you still need the vent tube to expell the gas in the event of a problem. When the excess pressure is released from the battery, the valves then close until the next time, BUT the gel/AGM is damaged at this point. You can also get a thermal runaway as well, which is not good.
So as you can see this has progressed from the old days, and the regen braking is now part of the vehicle emissions system, and even has a free wheeling pully that disengages it when not required to supply current, a vast change has been done to alternators and charging systems, and you need a product that is equally up to date to run the dual charging situation nowadays..
The clue is in Daves position, the fact that the VSR was used inappropriately, and the insurance have an investigator looking at the subsequent fire.. Would you like to have fitted that vehicles VSR? Sometimes you do not need to know the in depth to appreciate that something is not a good idea, and you have to have big wot sits to go your own path.
NO offence is intended by this post!